Schumer's Tax Trap

Here's something to keep a close eye on. Yesterday when Chuck Schumer muscled his way into the tax reform debate many of us who follow this stuff recognized it as an effort to prevent fellow Dems from striking a crappy deal, or at least to strengthen their bargaining position. In either case, it was bound to complicate back channel negotiations with Republicans.

But 24 hours later it looks like its greatest effect has been to force Republicans to show their cards early.

To review quickly, Schumer argued that Dems should abandon the framework that's undergirded their negotiations with Republicans for months. Instead of agreeing to lower marginal tax rates in exchange for broadening the tax base, they should insist on kicking the marginal tax rates on high incomes up a notch, broaden the base by targeting tax expenditures that benefit top earners, and raise the tax rate on capital gains. Basically to push for significant revenue and to take it all from top earners.

His argument is that medium term deficits are too high to use the old Reagan formula and that broadening the base to pay for tax cuts for rich people will either leave no money left over to reduce budget deficits or require higher taxes on middle income earners or both.

Fairly straightforward.

The response from Democrats -- including those who've bought into the base-broadening, rate-lowering framework -- has been pretty quiet.

Mitch McConnell issued a scathing statement. So did John Boehner's office.

If I'm negotiating with Republicans, I see that response and I think two things -- two things, which, let's face it, should've been obvious from the outset: that reducing the deficit is a distant priority for Republicans, far, far behind lowering the top tax rate, and that Schumer's right -- I'm being had. Question now is whether Dems see it the same way.

About The Author

Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight and the debt limit fight. He can be reached at brian@talkingpointsmemo.com